Gas prices may collapse to negative values – Bloomberg

In connection with falling of demand for natural gas in Qatar, which is the world’s largest exporter of the fuel, may start a price war. This is stated in the material the Agency Bloomberg, published may 12.

According to the Agency, the gas market may repeat the fate of the oil market – the price of liquefied natural gas may fall to negative values. In this regard, Qatar will face a choice: to reduce production of hydrocarbons or to start a price war.

Potential reduction in production would reduce government revenue, while a decrease in prices for hydrocarbons may “exacerbate the collapse in the gas market”.

Surveyed by Bloomberg experts say that now the situation is developing according to the “oil scenario”: the storage of gas in Europe are filled quickly, what was observed in the United States, when U.S. crude plummeted to almost minus $40 per barrel. Now the European gas storage facilities due to low demand filled by 66%, while that in the last five years the average occupancy rate remained at the level of 38%.

The Agency says that the decline in gas prices would be “particularly devastating” for American mining companies. Also hurt the Russian and Norwegian gas producers – the cost of gas in these countries is significantly higher than that in Qatar, the latter two countries have already cut gas exports to Europe.

On 20 April the price of may futures WTI for the first time in the history became negative (fall in the value of contracts with maturity in June and later was a minor) – during the day APR quotations fell to minus $40 per barrel. It also triggered the collapse of prices on the European spot market (prisoners in this market contracts are executed immediately). The estimated price of the Russian benchmark Urals oil fell to minus $3 per barrel of North sea benchmark Brent crude to minus us $3.5.

The rapid decline in oil prices was due to a record drop in demand for hydrocarbons because of the pandemic coronavirus, and the ensuing economic crisis and fears of traders that storage facilities will soon be filled.

To the level before the fall of oil quotations returned on 30 April, on the eve of the entry into force of the agreement OPEC+ about record reduction in oil production.

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